Best and worst presidents for economic growth in South Africa
Since the start of the democratic era, South Africa’s four elected presidents have seen different levels of economic growth, but some have had much harder challenges to overcome.
According to a research note from the Bureau for Economic Research’s Nicolaas van der Wath, economists often compare GDP growth with population growth to determine a nation’s average income or welfare trend.
In 1994, South Africa had a GDP of R3.6 trillion (in constant 2023 prices).
When Nelson Mandela was president from 1994 until 1999, economic growth saw no solid upward momentum, lifting only 17% since 1993 (2.7% annual average). This was, however, above the 12% population growth of the same period.
From 2000 to 2008, when Thabo Mbeki was president, economic growth accelerated to an average of 4.2% annually, far higher than population growth.
“By 2008, domestic output was recorded at R5.9 trillion in 2023 prices, up 44% from 1999, while the population was up by only 12%, implying that GDP per capita increased by about 29% over the same period,” said Van der Wath.
This period of solid growth ended suddenly in 2009 when the Global Financial Crisis (GFC) caused South Africa’s GDP to contract by 1.5%. Jacob Zuma also became President this year.
Although growth resumed in 2010, it lost momentum in the following years.
Real output reached R6.9 trillion in 2009 – 19% higher than in 2009 (1.9% average annual growth).
The population increased by 14% over the same period, suggesting that GDP per capita increased by 4% in nearly a decade.
The economy continued to lose momentum after 2019 despite hope that Cyril Ramaphosa could turn the ship around quickly.
“In 2020, the economy contracted by a staggering 6% as the COVID-19 pandemic caused global panic, followed by an artificially induced economic shutdown,” said Van Der Wath.
“It took the economy two years to recover from the malaise. However, growth remained disappointing: GDP in 2023 reached R7 trillion, not much higher (1%) than in 2019.”
“Over the same period, the population expanded by 6% to reach 61.3 million people, implying that GDP per capita fell by 4%.”
Although economic policies shape a country’s economic course, impactful events cannot be ignored. For instance, South African growth averaged 4.7% in the 1950s following a post-war boom but only 0.2% in the first half of the 1990s due to political uncertainty.
The second half of the 1990s saw growth recover to an average of 2.6% following an historic democratic transition, which marked an end to international sanctions and a return of business and investor confidence.
“Sound macroeconomic policies (RDP and GEAR) contributed, focusing on raising fixed investment, keeping consumption at bay and lowering government debt.”
“Internationally, the 1990s were marked by better prospects; inflation was under control, and the Cold War was over following the collapse of the Soviet Union in 1991. This opened a new era of international trade and cooperation.”
“During the first decade of the new millennium, South Africa’s GDP growth accelerated to an average of 3.6%. By the middle of the decade, growth reached a high of 5.6% (in 2006).”
“However, part of this surge was fuelled by extremely low interest rates in the US, which resulted in a massive property bubble, followed by the Global Financial Crisis (GFC).”
Following this, the decade ended with a contraction of 1.5% in 2009, with growth gradually slowing in the 2010s.
In addition, political chaos, mismanagement at SOEs, the increase in load shedding, and the rise of state capture all contributed to a deterioration in economic performance.
“The government’s macroeconomic policies changed course towards more consumption and less fixed investment; average GDP growth in this decade fell to only 1.7% per year.”
“The 2020s started on a difficult footing. The COVID-19 pandemic rapidly spread around the world, and governments all over closed borders and demanded that their citizens stay at home.”
“As a result, South Africa’s GDP contracted by 6.2% in 2020. Though the economy partially recovered the following year, an acute shortage in electricity due to a faltering Eskom kept a lid
on growth.”
South Africa vs the rest of the world
Data on GDP per capita shows that South Africa is lagging behind the rest of the world in terms of income growth.
South Africa’s GDP per capita was R75,200, or US$13,200 (PPP, constant 2011 prices) in 2023.
This level is close to the world average of $11,600 and other emerging markets ($12,500). It is also far higher than the $4,000 seen in Sub-Saharan Africa.
“However, South Africa’s growth performance over the past 30 years has lagged behind other regions and the global economy.”
“In 1993, South Africa’s GDP per capita was $10,300, increasing by 29% over the following three
decades.”
“Globally, GDP per capita increased by 70% over the same period, while in Sub-Saharan Africa, it rose by 45%. Even in advanced economies (which have no catch-up potential), individual income levels improved by more, at 57%.”
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